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Terminology

Terms

Balanced Market – A normal distribution curve in which supply and demand forces are in equilibrium.

Unbalanced Market – A market in which supply and demand forces have changed and signals that a new distribution curve is forming. Each successive day displays a Value Area that is moving in the direction of the overall unbalanced market. As an example, an unbalanced market up would show successively higher Value Areas.

Time /Price Opportunity (TPO) – The basic unit of analysis of trading activity. Each curve is divided into time frames which are represented by letters of the alphabet. Each print represents a trade at that price during the designated time frame.

TPO Balance – The price at which supply and demand forces are at equilibrium. It is the price, within a given time distribution, at which there is equal trading activity above and below.

Longest Line – The price at which the market perceives value, and the price at which the greatest amount of trading is facilitated.

Mid-range – Mathematical mean of a given distribution.

Initial Balance – Each market has a different time frame with the Initial Balance defined as the time frame within which 62% of the time, 90% of the full days trading range occurs. The Initial Balance defines normal trading activity and is important to know because when a market moves beyond the Initial Balance range, supply and demand forces are changing to create this extended price movement.

Value Area – The range of traded prices falling within one standard deviation of a given normal distribution curve. .

Extremes – Extremes are prices that are rejected quickly due to supply and demand imbalances and are identified by two or more single TPO’s at the top or bottom of a normal distribution curve.

Days

Normal Day – Normal days occur 62% of the time with prices trading within the Initial Balance 90% of the time.

Normal Variation Day – Normal variation days occur about 20% of the time and are very much like normal days but the Initial Balance is 50% of the day’s range.

Neutral Day – Neutral days occur about 5% of the time. The Initial Balance is about 70% to 85% of the day’s range and there are range extensions on both sides of the Initial Balance. This type of day is caused by long-term buyers and sellers and often signals the tail activity of a distribution curve.

Non-Trend Day – Non-trend days occur about 6% of the time. They usually have a small initial balance that is 95% of the day’s range, with good volumes traded considering the small range. Non-trend days signal either trend continuation, or possible changes that a market will be moving into a new or different distribution curve.

Trend Day – Trend days occur about 6% of the time. They have a small Initial balance and build little or no value. The initial balance is about 25% of the day’s range. Trend days are also known as liquidation days and signal either the Long-term buyers or Long-term sellers liquidating positions.

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